Japan’s core CPI trajectory through September 2026, with readings averaging below 2% for most of the first nine months before rising to 2.1%, underpins the 71.5% market-implied probability on a full-year outcome of ≤1.9%. Energy subsidies, earlier subdued wage pass-through, and base effects from 2025 have kept the annual figure contained despite recent upward pressure from higher crude oil, food costs, and yen depreciation. The Bank of Japan’s October statement that underlying inflation has generally reached its 2% target, paired with expectations for October data near 2.3%, highlights near-term momentum but has not yet altered the market’s assessment of the 2026 average. Traders are monitoring the November 20 release and December FOMC-adjacent BOJ meeting for any acceleration that could lift the yearly print into the 2.0-2.4% range, currently priced at 28.4%.